To the editor:
The current crop of about 20 Democrat candidates for president are wildly progressive. They’re trying to out-do each other by offering more free benefits. Such things as free college tuition, forgiving college debt, free single-payer medical care, guaranteed vacation/sick leave and universal job guarantees are some of the goodies they offer. These benefits are often found in the socialist countries that Bernie and the other radical leftists so admire.
Most of the would-be presidents want to sock it to the rich and tax corporations to the hilt in order to finance their programs. But economics isn’t their strong point.
Socialist countries which actually provide such benefits have high income taxes, sock it to the rich and heavily tax corporations, but also have the VAT (value added tax), a form of sales tax. Norway, Sweden and Denmark have VAT rates of 25%. Finland charges 24%. The rate in the UK and France is 20%. Germany’s is 19%. Food and other essentials are partly exempted. The VAT rates are in addition to high income tax rates. In the U.S., VAT would be added to state sales taxes, some of which are already very high.
These countries get your money when you earn it and when you spend it – coming and going. If America is to go socialist, we probably have no choice but to adopt the VAT.
I have this slightly socialist urge for subsidized catastrophic health care. I’d like to see a means-tested program to pay for treatment of chronic, serious diseases for those not covered by Medicare. Heart disease, stroke, blood and kidney diseases including diabetes, many cancers and mental illnesses, Alzheimer’s and serious arthritis are among the catastrophic conditions I’d like to see covered. I would finance this with a VAT.
American health care is the best but is very expensive. Americans spent more than $1 trillion on chronic disease in fiscal year 2018, according to the Milken Institute. By limiting the diseases included and by means testing the patients at a reasonable level, suppose we could assume about $500 billion a year for my program. Here’s a wild guess. Based on estimated consumer spending of $13.3 trillion in 2019, a 4% VAT would cover it if collections were perfectly efficient. In practice, the rate would be somewhat higher – say 6%. We must not forget administrative costs, much higher with any government program.
That 6% on a $30,000 car purchase would only add $1,800. You’d hardly notice it.
Governments have three primary ways to finance a program: borrow, steal or print money. Taxation is stealing from the economy, like a vampire at a neck, but it’s actually the best way.
If I set the VAT rate correctly, this plan could provide the “free” benefits without affecting our national debt.
Want “free” college? Maybe another 6% to 8% added to the VAT. Single-payer health care? Maybe 10% to 12%. An additional tax for every freebie. That’s the American way. The bright side is, sales taxes aren’t limited to 100 percent.